Demystifying the Form 5471 Part 8. Schedule M

Demystifying the Form 5471 Part 8. Schedule M

Tax Law
By Anthony Diosdi Schedule M is designed to measure intercompany payments. Schedule M requires the majority U.S. owner to provide information on transactions between the CFC and its shareholders or other related persons. This is the eighth of a series of articles designed to provide a basic overview of the Internal Revenue Service (“IRS”) Form 5471. This article is designed to supplement the IRS’ instructions to Schedule M of IRS Form 5471. This article will go column by column and line by line through the attachment to Form 5471.Who Must Complete Schedule MForm 5471 and appropriate accompanying schedules must be completed and filed by the following categories of persons:Category 1 FilerU.S. persons who are officers, directors or ten percent or greater shareholders in a CFC. Category 1 includes U.S. shareholders…
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Do Shareholders of Dormant Foreign Corporations Still Need to File a Form 5471?

Do Shareholders of Dormant Foreign Corporations Still Need to File a Form 5471?

Tax Law
By Anthony Diosdi U.S. persons with certain interests in controlled foreign corporations (“CFCs”) must disclose their interests on Form 5471. Sometimes, CFCs temporarily stop conducting business and as a result, the CFC’s U.S. shareholders assume that it is not necessary to file an IRS Form 5471. This is an incorrect assumption and can result in serious penalty assessments by the IRS. Even if a CFC is dormant, the U.S. shareholders must still file a Form 5471. The good news is shareholders of a dormant CFC can qualify for minimal Form 5471 reporting requirements. Revenue Procedure 92-70 discusses the circumstances when a CFC shareholder qualifies for minimal Form 5471 reporting requirements.Per Revenue Procedure 92-70, there are eight conditions that must be met in order for a foreign corporation to be considered…
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Demystifying the Form 5471 Part 7. Schedule P

Demystifying the Form 5471 Part 7. Schedule P

Tax Law
By Anthony Diosdi Schedule P is used to report the Previously Taxed Earnings and Profits (“PTEP”) of the U.S. shareholder of a controlled foreign corporation (“CFC”) in the CFC’s functional currency (Part I) and in U.S. dollars (Part II). This schedule is also used to report the PTEP of the U.S. shareholder of a specified foreign corporation (“SFC”) that is only treated as a CFC for limited purposes under Internal Revenue Code Section 965(e)(2). This is the seventh of a series of articles designed to provide a basic overview of the Internal Revenue Service (“IRS”) Form 5471. This article is designed to supplement the IRS’ instructions to Schedule P of IRS Form 5471. This article will go column by column and line by line through the attachment to Form 5471.Who…
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